Statistics

Small Business Statistics (2026)

Updated · Team Fonda

Short answer

There are 36,207,130 small businesses in the United States, which is 99.9% of all firms, according to the SBA Office of Advocacy's February 2026 fact sheet. Most are very small: 82.3% have no paid employees. Small businesses employ 45.9% of private sector workers.

Key takeaways

  • The US has 36,207,130 small businesses, and 82.3% of them have no paid employees (SBA Office of Advocacy).
  • Small businesses employ 62.3 million people and have accounted for 61% of net new jobs since 1995.
  • Americans filed 501,609 business applications in October 2026 alone (US Census Bureau, seasonally adjusted).
  • 78.9% of new establishments survive their first year and about half reach year five (US Bureau of Labor Statistics).
  • 42% of small employer firms that applied for financing got the full amount they asked for (Federal Reserve Small Business Credit Survey).

How many small businesses are there in the US?

The SBA Office of Advocacy counts any independent business with fewer than 500 employees as small. By that definition almost every US business is small, and the typical one is a single person with no payroll. Many of those are sole proprietorships, freelancers and side businesses.

The same fact sheet says the number of nonemployer firms nearly doubled between 1997 and 2022. For more on who owns these businesses, see women entrepreneur statistics.

How much of the economy is small business?

Small businesses employ a little under half of private sector workers but have created well over half of the net new jobs. From January 1995 to December 2024 the SBA counts 20.7 million net new jobs at small businesses and 13.2 million at large ones.

How many small businesses start each year?

There are two ways to count starts. The Census Bureau counts business applications, which are requests for a federal tax ID. Many of those never hire anyone. The Bureau of Labor Statistics counts new establishments that have employees, a much smaller number. "High-propensity" applications are the ones the Census Bureau judges most likely to become employers.

The number of young employer establishments has eased each year since the 2022 peak but is still far above the 569,387 recorded in March 1994, the earliest year the same BLS table reports for this age group.

How long do small businesses survive?

The claim that most new businesses close within a year is not supported by the official data. In the BLS figures, about four in five new establishments are still open after one year and about half are open after five. The steepest drop comes early, then the yearly loss slows down. An establishment is one location with employees, and a closure is not always a failure: owners also sell, merge or retire. Our startup failure statistics page covers this in more depth.

How do small businesses get financing?

The Federal Reserve's Small Business Credit Survey asks small employer firms (1 to 499 employees) about their finances. The 2025 survey collected 6,525 responses. It is a convenience sample, not a random one, so read the figures as a strong indication and not an exact count. The picture is that borrowing is common, full approval is not, and rising costs squeeze cash flow for most firms.

The same report names reaching customers and growing sales as the most commonly reported operational challenge.

What this means if you are starting a business

  • Starting alone is the norm. More than four in five small businesses have no employees. You do not need a team, an office or outside money to count as a real business.
  • The first years carry the most risk. About one in five new establishments closes in year one. Lower that risk before you spend by validating the idea with real customers.
  • Do not plan around a loan you may not get. Fewer than half of applicants receive everything they ask for. Work out the smallest version you can fund yourself with the startup cost calculator.
  • Costs will rise, so know your margin. Use the break-even calculator to see how many sales cover your costs, then test what happens if costs go up.
  • Sales is the hard part. Established owners say finding customers is their top operational problem, so practice early by finding your first 10 customers before you build much.

If you want help with the testing step, Fonda is an AI co-founder that guides you through market research, key risks and real customer interviews before giving a go, refine or pivot Verdict. It is free to start.

Frequently asked questions

What counts as a small business in the US?

For research, the SBA Office of Advocacy defines a small business as an independent business with fewer than 500 employees. For government loans and contracts, the SBA uses separate size standards that differ by industry, so check the standard for your industry before you apply for a program.

Why do different sources give different numbers of new businesses?

They count different things. Census business applications count every request for a federal tax ID, including ones that never trade. BLS counts only establishments with employees. SBA totals add in firms with no employees, and the latest count in the 2026 fact sheet is for 2022.

Is it true that most small businesses fail in the first year?

No. In BLS data, 78.9% of private sector establishments born in the year ended March 2025 were still open a year later. Roughly half of new establishments close before year five, and the pace of closures slows after that.

Are these statistics only for the United States?

Yes. Every figure on this page is for the US. Other countries define small business differently, often with a lower employee limit, so their numbers are not directly comparable.

Sources

  1. SBA Office of Advocacy, Frequently Asked Questions About Small Business (February 2026)
  2. SBA Office of Advocacy news release on the 2026 fact sheet, as republished by Cascade Business News
  3. US Census Bureau, Business Formation Statistics, October 2026 release (November 12, 2026)
  4. US Bureau of Labor Statistics, Business Employment Dynamics, Table 5: establishments by age
  5. US Bureau of Labor Statistics, Business Employment Dynamics, Table 7: survival of private sector establishments by opening year
  6. Federal Reserve Banks, 2026 Report on Employer Firms: Findings from the 2025 Small Business Credit Survey

Keep reading